1. © OECD/IEA 2011 World Energy Outlook 2011 Carnegie Endowment Washington DC, 28 November 2011

2. © OECD/IEA 2011 The context: fresh challenges add to already worrying trends Economic concerns have diverted attention from energy policy and limited the means of intervention Post-Fukushima, nuclear is facing uncertainty MENA turmoil raised questions about regions investment plans Some key trends are pointing in worrying directions: CO 2 emissions rebounded to a record high energy efficiency of global economy worsened for 2 nd straight year spending on oil imports is near record highs

3. © OECD/IEA 2011 Emerging economies continue to drive global energy demand Growth in primary energy demand in the New Policies Scenario Global energy demand increases by one-third from 2010 to 2035, with China & India accounting for 50% of the growth 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 201020152020202520302035 Mtoe China India Other developing Asia Russia Middle East Rest of world OECD

4. © OECD/IEA 2011 Natural gas & renewables become increasingly important Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035 Additional to 2035 2010 World primary energy demand 0 1 000 2 000 3 000 4 000 5 000 OilCoalGasRenewablesNuclear Mtoe

5. © OECD/IEA 2011 Oil demand is driven higher by soaring car ownership Vehicles per 1000 people in selected markets The passenger vehicle fleet doubles to 1.7 billion in 2035; most cars are sold outside the OECD by 2020, making non-OECD policies key to global oil demand 2010 2035 0 100 200 300 400 500 600 700 800 United StatesEuropean Union ChinaIndiaMiddle East

6. © OECD/IEA 2011 US oil imports decline More stringent vehicle fuel efficiency standards and expanding domestic production from light tight oil cause US oil imports to fall to about 6 mb/d in 2035 US liquids supply 0 5 10 15 20 25 19902005201020202035 mb/d Net oil imports Biofuels Natural gas liquids Crude oil

7. © OECD/IEA 2011 Changing oil import needs are set to shift concerns about oil security Net imports of oil EU oil imports overtake those of the US around 2015 and China becomes the worlds largest oil importer around 2020 0 2 4 6 8 10 12 14 ChinaIndiaEuropean Union United States Japan mb/d 2000 2010 2035

8. © OECD/IEA 2011 What impact would deferred investment in MENA have on markets? MENA is set to supply the bulk of the growth in oil output to 2035, requiring investment of over $100 billion/annum Deferred Investment Case looks at near-term investment falling short by one-third possible drivers include new spending priorities, higher perceived risks, etc MENA output falls 3.4 mb/d by 2015 and 6.2 mb/d by 2020 Consumers face a near-term rise in oil prices to $150/barrel MENA earns more initially, but then less as market share is lost

9. © OECD/IEA 2011 Golden prospects for natural gas Largest natural gas producers in 2035 Unconventional natural gas supplies 40% of the 1.7 tcm increase in global supply, but best practices are essential to successfully address environmental challenges 0 200 400 600 8001 000 Norway India Australia Algeria Canada Qatar Iran China United States Russia bcm Conventional Unconventional

10. © OECD/IEA 2011 Coal won the energy race in the first decade of the 21st century Growth in global energy demand, 2000 2010 Coal accounted for nearly half of the increase in global energy use over the past decade, with the bulk of the growth coming from the power sector in emerging economies Nuclear 0 200 400 600 800 1 000 1 200 1 400 1 600 Coal Mtoe Total non-coal Natural gas Oil Renewables

11. © OECD/IEA 2011 Globally, second thoughts on nuclear would have far-reaching consequences Low Nuclear Case examines impact of nuclear component of future energy supply being cut in half Gives a boost to renewables, but increases import bills, reduces diversity & makes it harder to combat climate change By 2035, compared with the New Policies Scenario: coal demand increases by twice Australias steam coal exports natural gas demand increases by two-thirds Russias natural gas net exports power- sector CO 2 emissions increase by 6.2% Biggest implications are for countries with limited energy resources that planned to rely on nuclear power

12. © OECD/IEA 2011 Power investment focuses on low-carbon technologies Share of new power generation and investment, 2011-2035 Renewables are often capital-intensive, representing 60% of investment for 30% of additional generation, but bring environmental benefits & have minimal fuel costs 0% 5% 10% 15% 20% 25% 30% 35% 40% CoalGasNuclearHydroWindSolar PV Generation Investment

13. © OECD/IEA 2011 The overall value of subsidies to renewables is set to rise Renewable subsidies of $66 billion in 2010 (compared with $409 billion for fossil fuels), need to climb to $250 billion in 2035 as rising deployment outweighs improved competitiveness Biofuels Electricity 0 50 100 150 200 250 200720082009201020152020202520302035 Billion dollars (2010)

14. © OECD/IEA 2011 Realising Russias potential for energy savings would have a big impact Natural gas savings from raising efficiency (to comparable OECD levels) Russias total energy savings potential is close to the primary energy used in a year by the UK; new efficiency policies bring results, but the savings potential remains large even in 2035 600400200 0 400 600 2008 2035 180 bcm 130 bcm Domestic gas demand / potential savings bcm Net exports

15. © OECD/IEA 2011 Russia remains a cornerstone of the global energy economy Russian revenue from fossil fuel exports An increasing share of Russian exports go eastwards to Asia, providing Russia with diversity of markets and revenues 2010 $255 billion 61% 16% 21% 2035 $420 billion 48% European Union 17% Other 20% China 15% Other Europe European Union Other Europe China 2% Other

16. © OECD/IEA 2011 Energy is at the heart of the climate challenge By 2035, cumulative CO 2 emissions from today exceed three-quarters of the total since 1900, and Chinas per-capita emissions match the OECD average European Union 0 100 200 300 400 500 United StatesChinaIndiaJapan Gigatonnes 2010-2035 1900-2009 Cumulative energy-related CO 2 emissions in selected regions

17. © OECD/IEA 2011 0 5 10 15 20 25 30 35 40 20102020202520302035 Delay until 2017 Delay until 2015 2015 Emissions from existing infrastructure The door to 2°C is closing, but will we be locked-in ? Without further action, by 2017 all CO 2 emissions permitted in the 450 Scenario will be locked-in by existing power plants, factories, buildings, etc 45 6°C trajectory 2°C trajectory CO 2 emissions (gigatonnes)

18. © OECD/IEA 2011 Energy poverty is widespread 31 8 Latin America Sub-Saharan Africa China India Rest of developing Asia 289 379 585 1.3 billion people in the world live without electricity Million people without electricity

19. © OECD/IEA 2011 If we dont change direction soon, well end up where were heading In a world full of uncertainty, one thing is sure: rising incomes & population will push energy needs higher US oil security improves, although world oil supply diversity is diminishing; new options are opening up for natural gas Coal – the forgotten fuel – has underpinned growth, but its future will be shaped by uptake of efficient power plants & CCS The world needs Russian energy, while Russia needs to use less Despite steps in the right direction, the door to 2°C is closing